NEW YORK — Tribune Co. has reached agreement in principle to sell Newsday to News Corp. for about $580 million in what would be a joint venture, a source familiar with the matter said Monday.
Under the terms of the deal, Newsday would be part of a joint venture with News Corp.'s New York Post and other News Corp. assets. News Corp would own most of the company; Tribune would keep a stake of less than 5%.
The pending deal was first reported in the Wall Street Journal.
Selling the paper would be key to Tribune Chief Executive and Chicago real estate magnate Sam Zell's plans to help slash debt at the company, which he took private in an $8.2 billion buyout last year.
The Newsday deal is expected to wipe out as much as $50 million in annual losses that News Corp. incurs on the Post.
Regulatory issues may slow the sale, particularly media ownership issues that could restrict the number of properties that News Corp. Chief Executive Rupert Murdoch could own in the New York area.
Other parties who have expressed interest in Newsday include Mortimer B. Zuckerman, who owns New York Post rival the New York Daily News, as well as Cablevision Systems Corp. Reuters previously reported that Zuckerman had bid on Newsday.
The pending agreement was fashioned largely by Murdoch, Zell and a senior banker, the Journal reported, adding that Murdoch and Zell met directly several times.
The structure of the deal is in part designed to meet Tribune's demand that it be as tax efficient as possible, with Tribune getting cash from the deal by guaranteeing debt from the joint venture, the Journal reported.
Several Tribune officials declined to comment. A News Corp. spokesman could not immediately be reached.